Exhibit
10.1
Principal
Amount: $250,000.00
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Issue
Date: February 11, 2009
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10%
SECURED CONVERTIBLE PROMISSORY NOTE
FOR
VALUE RECEIVED, ThermoEnergy Corporation, a Delaware corporation
(the “Borrower”), hereby promise to pay to the order of
The Quercus Trust (the “Holder”), the sum of Two
Hundred Fifty Thousand Dollars ($250,000.00) on the earlier to
occur of (i) the closing of an equity or convertible debt
investment in the Borrower yielding gross proceeds to the Borrower
of not less than Two Million Dollars ($2,000,000.00)(a
“Financing”) or December 31, 2009 (in either case, the
“Maturity Date”). Unless the Holder is
participating as an investor in the Financing, the Borrower shall,
at least ten (10) days prior to the initial closing of the
Financing, give the Holder written notice setting forth the details
of the Financing (including, without limitation, the terms of the
securities to be issued in the Financing (the “Financing
Securities”), the price per share at which such Financing
Securities will be issued (the “Financing Price”) and
the expected gross proceeds to the Borrower)(the “Financing
Notice”).
Interest
on the outstanding principal balance shall be paid at the rate of
ten percent (10.0%) per annum, payable in arrears on the last day
of each March, June, September and December, commencing on March
31, 2009 and continuing through the Maturity Date (each, an
“Interest Payment Date”). Interest shall be
computed on the basis of a 365-day year, using the number of days
actually elapsed.
At
the election of the Borrower by written notice to the Holder, all
or any portion of any payment of interest due under this Note on
any particular Interest Payment Date may be paid by the issuance to
the Holder, on such Interest Payment Date, of shares of the
Borrower’s Common Stock, par value $0.001 per share (the
“Common Stock”). The number of shares of
Common Stock to be issued in payment of interest on any particular
Interest Payment Date shall be determined by dividing (i) the
amount of interest to be so paid by (ii) ninety percent (90%) of
the volume weighted average trading price per share of Common Stock
for the ten (10) trading days immediately preceding such Interest
Payment Date on the New York Stock Exchange, the American Stock
Exchange, the Nasdaq Global Select Market, the Nasdaq Global
Market, the Nasdaq Capital Market or the OTC Bulletin Board, as
reported by Bloomberg Financial Markets, or any successor
performing similar functions.
The
Holder shall have the right at any time and from time to time until
the principal and interest on this Note shall have been paid in
full, to participate in the Financing by converting the principal
amount of this Note into shares of the Financing Securities at a
price per share equal to ninety percent (90%) of the Financing
Price. If the Holder desires to exercise its
right of conversion, the Holder shall, within five (5) business
days after delivery of the Financing Notice, give the Borrower a
written notice, setting forth the amount of principal which the
Holder will convert in the Financing. The Holder’s
right to participate in the Financing by conversion of this Note
shall be conditioned on the Holder’s entering into such
purchase agreements and related agreements as shall be executed at
the closing of the Financing by the other investors participating
in the Financing. Except to the extent that the entire
unpaid principal balance of this Note is being presented for
conversion, the Holder shall not be required to present this Note
in order to effect conversion, and the Holder shall maintain a
ledger setting forth each conversion of principal and interest on
this Note and such ledger shall, absent manifest error, be deemed
to be binding and conclusive on the Borrower.
The
obligations of the Borrower under this Note are secured by a pledge
of certain assets of the Borrower pursuant to a Security Agreement
of even date herewith by and between the Borrower and the Holder
(the “Security Agreement”) and the holder of this Note
shall be entitled to all of the benefits of the Security
Agreement.
This
Note may not be prepaid, in whole or in part, without the prior
written consent of the Holder. Partial prepayments, if
any, shall be applied first to accrued and unpaid interest, and the
balance to principal.
The
entire unpaid principal amount of this Note, together with interest
thereon shall, on written notice from the Holder, forthwith become
and be due and payable if any one or more Events of Default shall
have occurred (for any reason whatsoever and whether such happening
shall be voluntary or involuntary or be affected or come about by
operation of law pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of
any administrative or governmental body) and be
continuing.
The
occurrence of any one or more of the following events or conditions
shall constitute an “Event of Default” under this
Agreement:
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